Abbott Reports First-Quarter 2016 Results
- First-quarter operational sales growth of 5.1 percent; first-quarter reported sales decline of 0.2 percent
- First-quarter adjusted EPS from continuing operations of $0.41, above previous guidance range; GAAP EPS from continuing operations of $0.04
- Raises full-year 2016 adjusted EPS guidance range for continuing operations to $2.14 to $2.24; projected full-year 2016 GAAP EPS for continuing operations of $1.36 to $1.46
- All four business segments met or exceeded operational sales growth expectations

ABBOTT PARK, Ill., April 20, 2016 /PRNewswire/ -- Abbott (NYSE: ABT) today announced financial results for the first quarter ended March 31, 2016.

Abbott 2016 Q1 Performance at-a glance

 

  • Adjusted diluted EPS from continuing operations, which excludes specified items, was $0.41 in the first quarter, above Abbott's previous guidance range. Reported diluted EPS from continuing operations under GAAP was $0.04 in the first quarter.
  • First-quarter worldwide sales of $4.9 billion increased 5.1 percent on an operational basis and decreased 0.2 percent on a reported basis.
  • Abbott is raising its full-year 2016 adjusted EPS guidance range for continuing operations to $2.14 to $2.24 from $2.10 to $2.20. Projected full-year 2016 EPS for continuing operations under GAAP is $1.36 to $1.46.
  • Abbott's recent innovations and product launches contributed to sales growth in the first quarter. Select recently launched products include ElevaTM in the premium segment of the Chinese infant formula market; Abbott's portfolio of infant and toddler non-GMO nutrition products in the U.S.; MitraClip®, Abbott's structural heart product for the treatment of mitral regurgitation; Freestyle® Libre in Europe; Supera® peripheral stent in the U.S. for treatment of blockages in the superficial femoral artery; and Abbott's portfolio of TECNIS® intraocular lenses for the treatment of cataracts.
  • In the first quarter, Abbott received European approval for use in children and teens of its revolutionary FreeStyle Libre Flash Glucose Monitoring System that eliminates routine finger sticks and finger-stick calibration. In Abbott Vascular, AbsorbTM, Abbott's fully dissolving vascular stent, earned a positive review from an independent U.S. Food and Drug Administration advisory committee.

"We're off to a good start to the year and are raising our full-year adjusted EPS guidance range," said Miles D. White, chairman and chief executive officer, Abbott. "All four of our businesses met or exceeded our growth expectations and underlying demand remains strong."

FIRST-QUARTER BUSINESS OVERVIEW

Following are sales by business segment and commentary for the first quarter:

Total Company
($ in millions)

               

% Change vs. 1Q15

   

Sales 1Q16

     

Int'l

 

Total

   

U.S.

 

Int'l

 

Total

 

U.S.

 

Operational

 

Reported

 

Operational

 

Reported

Total *

 

1,531

 

3,354

 

4,885

 

1.9

 

6.6

 

(1.2)

 

5.1

 

(0.2)

Nutrition

 

719

 

952

 

1,671

 

4.9

 

3.9

 

(3.2)

 

4.3

 

0.1

Diagnostics

 

339

 

779

 

1,118

 

3.7

 

8.2

 

1.8

 

6.9

 

2.3

Established Pharmaceuticals

--

 

888

 

888

 

 n/a 

 

11.0

 

(1.0)

 

11.0

 

(1.0)

Medical Devices

 

466

 

731

 

1,197

 

(3.9)

 

3.5

 

(1.3)

 

0.5

 

(2.4)

 

 Note: Operational growth reflects percentage change over the prior year excluding the impact of exchange rates.

 * Total Abbott Sales from continuing operations include Other Sales of $11 million.

 n/a = Not Applicable.

 

First-quarter 2016 worldwide sales of $4.9 billion increased 5.1 percent on an operational basis and decreased 0.2 percent on a reported basis, including an unfavorable 5.3 percent effect of foreign exchange.

U.S. sales increased 1.9 percent, led by 9.2 percent growth in Point of Care Diagnostics, 7.5 percent growth in Medical Optics, and 4.9 percent growth in Nutrition.

International sales increased 6.6 percent on an operational basis and decreased 1.2 percent on a reported basis in the first quarter. International operational sales growth was led by 11.0 percent growth in Established Pharmaceuticals, 11.0 percent growth in Diabetes Care and 8.2 percent growth in Diagnostics.

Nutrition
($ in millions)        

               

% Change vs. 1Q15

   

Sales 1Q16

     

Int'l

 

Total

   

U.S.

 

Int'l

 

Total

 

U.S.

 

Operational

 

Reported

 

Operational

 

Reported

Total

 

719

 

952

 

1,671

 

4.9

 

3.9

 

(3.2)

 

4.3

 

0.1

Pediatric

 

403

 

564

 

967

 

4.7

 

4.1

 

(2.3)

 

4.4

 

0.5

Adult

 

316

 

388

 

704

 

5.2

 

3.6

 

(4.6)

 

4.3

 

(0.5)

 

Worldwide Nutrition sales increased 4.3 percent in the first quarter on an operational basis and 0.1 percent on a reported basis, including an unfavorable 4.2 percent effect of foreign exchange.

Worldwide Pediatric Nutrition sales increased 4.4 percent on an operational basis and 0.5 percent on a reported basis in the quarter, including an unfavorable 3.9 percent effect of foreign exchange. In the U.S., above-market sales growth was led by recently launched infant and toddler non-GMO products, including Similac® Advance® Non-GMO and Go & Grow by Similac Non-GMO. International growth was led by market share expansion of Eleva in the premium segment of the Chinese infant formula market, as well as continued strong performance in Russia and across several countries in Latin America.

Worldwide Adult Nutrition sales increased 4.3 percent on an operational basis and decreased 0.5 percent on a reported basis in the quarter, including an unfavorable 4.8 percent effect of foreign exchange. International Adult Nutrition growth was led by continued strong growth of Ensure® and Glucerna® in Latin America and other priority geographies. U.S. Adult Nutrition sales growth of 5.2 percent was led by growth of Ensure in the retail and institutional market segments. During the quarter, Abbott launched Ensure Enlive®, a nutrition drink that helps adults rebuild lost muscle and regain strength and energy.

Diagnostics
($ in millions)

               

% Change vs. 1Q15

   

Sales 1Q16

     

Int'l

 

Total

   

U.S.

 

Int'l

 

Total

 

U.S.

 

Operational

 

Reported

 

Operational

 

Reported

Total 

 

339

 

779

 

1,118

 

3.7

 

8.2

 

1.8

 

6.9

 

2.3

Core Laboratory

 

190

 

695

 

885

 

2.4

 

8.6

 

2.1

 

7.3

 

2.1

Molecular

 

47

 

61

 

108

 

(2.1)

 

3.2

 

(3.4)

 

1.0

 

(2.8)

Point of Care

 

102

 

23

 

125

 

9.2

 

9.6

 

7.2

 

9.3

 

8.8

 

Worldwide Diagnostics sales increased 6.9 percent in the first quarter on an operational basis, driven by continued above-market growth globally, including strong growth in both emerging and developed markets. Sales increased 2.3 percent on a reported basis, including an unfavorable 4.6 percent effect of foreign exchange.

Core Laboratory Diagnostics sales increased 7.3 percent in the quarter on an operational basis and 2.1 percent on a reported basis, including an unfavorable 5.2 percent effect of foreign exchange. Operational sales growth in the quarter was driven by double-digit growth in emerging markets.

Molecular Diagnostics sales increased 1.0 percent in the quarter on an operational basis and decreased 2.8 percent on a reported basis, including an unfavorable 3.8 percent effect of foreign exchange. Strong operational sales growth in Abbott's infectious disease testing business was offset, as expected, by the planned scale down of its genetics business.

Point of Care Diagnostics sales increased 9.3 percent in the quarter on an operational basis and 8.8 percent on a reported basis, including an unfavorable 0.5 percent effect of foreign exchange. Sales growth was led by continued adoption of Abbott's i-STAT® handheld system in the U.S. and international markets.

Established Pharmaceuticals
($ in millions)

               

% Change vs. 1Q15

   

Sales 1Q16

     

Int'l

 

Total

   

U.S.

 

Int'l

 

Total

 

U.S.

 

Operational

 

Reported

 

Operational

 

Reported

Total

 

--

 

888

 

888

 

n/a

 

11.0

 

(1.0)

 

11.0

 

(1.0)

Key Emerging Markets

 

--

 

634

 

634

 

n/a

 

11.9

 

(3.2)

 

11.9

 

(3.2)

Other

 

--

 

254

 

254

 

n/a

 

8.6

 

4.9

 

8.6

 

4.9

 

Established Pharmaceuticals sales increased 11.0 percent in the first quarter on an operational basis and decreased 1.0 percent on a reported basis, including an unfavorable 12.0 percent effect of foreign exchange.

Key Emerging Markets include India, Russia, Brazil and China, along with several additional emerging markets that represent the most attractive long-term growth opportunities for Abbott's branded generics product portfolio. Sales in these key geographies increased 11.9 percent on an operational basis and decreased 3.2 percent on a reported basis, including an unfavorable 15.1 percent effect of foreign exchange.

Operational sales growth in Key Emerging Markets was led by continued double-digit growth in India, which comprises more than 20 percent of Abbott's Established Pharmaceuticals sales. Sales growth in India was led by double-digit growth across several core therapeutic areas, including women's health, gastroenterology, and cardio-metabolics. During the quarter, Abbott also achieved above-market growth in China and several countries in Latin America as it continues to expand its presence and portfolio in these key geographies.

Medical Devices
($ in millions)

               

% Change vs. 1Q15

   

Sales 1Q16

     

Int'l

 

Total

   

U.S.

 

Int'l

 

Total

 

U.S.

 

Operational

 

Reported

 

Operational

 

Reported

Total

 

466

 

731

 

1,197

 

(3.9)

 

3.5

 

(1.3)

 

0.5

 

(2.4)

Vascular

 

289

 

396

 

685

 

1.9

 

0.2

 

(4.5)

 

0.9

 

(1.9)

Diabetes Care

 

69

 

174

 

243

 

(31.6)

 

11.0

 

4.8

 

(5.2)

 

(9.1)

Medical Optics

 

108

 

161

 

269

 

7.5

 

4.2

 

0.5

 

5.4

 

3.2

                                 

Vascular Product Lines:

                               

Coronary Devicesa)

 

194

 

336

 

530

 

4.9

 

(1.1)

 

(5.6)

 

0.9

 

(2.0)

Endovascularb)

 

73

 

60

 

133

 

9.5

 

8.6

 

2.9

 

9.0

 

6.4

                                 
 

a) Includes DES / BVS product portfolio, structural heart, guidewires, balloon catheters, and other coronary products.

b) Includes vessel closure, carotid stents and other peripheral products.

 

Worldwide Medical Devices sales increased 0.5 percent in the first quarter on an operational basis and decreased 2.4 percent on a reported basis, including an unfavorable 2.9 percent effect of foreign exchange.

Worldwide sales of Vascular products increased 0.9 percent in the quarter on an operational basis and decreased 1.9 percent on a reported basis, including an unfavorable 2.8 percent effect of foreign exchange. Sales of MitraClip, Abbott's device for the treatment of mitral regurgitation, increased double-digits globally, as Abbott continues to build the market for this first-in-class device. Growth in Abbott's Endovascular business was driven by vessel closure products and Supera, Abbott's peripheral stent for the treatment of blockages in the superficial femoral artery and proximal popliteal artery in the upper leg. In March, Absorb, Abbott's fully dissolving vascular stent, received a positive review from an independent U.S. FDA advisory committee. 

Worldwide Diabetes Care sales decreased 5.2 percent in the quarter on an operational basis and 9.1 percent on a reported basis, including an unfavorable 3.9 percent effect of foreign exchange. Strong international sales growth was driven by continued consumer uptake of FreeStyle Libre, Abbott's revolutionary Flash Glucose Monitoring System that eliminates routine finger sticks and finger-stick calibration. During the quarter, Abbott received European approval for use of FreeStyle Libre in children and teens. In the U.S., sales were impacted by competitive and market dynamics.

Worldwide Medical Optics sales increased 5.4 percent in the quarter on an operational basis and 3.2 percent on a reported basis, including an unfavorable 2.2 percent effect of foreign exchange. Operational sales growth was driven by continued market uptake of cataract products in the premium intraocular lens segment, including TECNIS Symfony and TECNIS Toric lenses.

ABBOTT RAISES FULL-YEAR ADJUSTED EARNINGS-PER-SHARE GUIDANCE RANGE

Abbott is raising its full-year 2016 guidance range for earnings per share from continuing operations, excluding specified items, to $2.14 to $2.24 from $2.10 to $2.20

Abbott forecasts net specified items for the full year 2016 of approximately $0.78 per share. Specified items include intangible amortization expense, the impact of the Venezuelan currency devaluation, and charges associated with cost reduction initiatives and deal and other expenses, partially offset by the favorable resolution of various tax positions from prior years.

Including net specified items, projected earnings per share from continuing operations under Generally Accepted Accounting Principles (GAAP) would be $1.36 to $1.46 for the full year 2016.

ABBOTT DECLARES 369TH QUARTERLY DIVIDEND

On Feb. 19, 2016, the board of directors of Abbott declared the company's quarterly dividend of $0.26 per share. Abbott's cash dividend is payable May 16, 2016, to shareholders of record at the close of business on April 15, 2016. This marks the 369th consecutive quarterly dividend paid by Abbott.

Abbott is a member of the S&P 500 Dividend Aristocrats Index, which tracks companies that have annually increased their dividend for 25 consecutive years.

About Abbott:

Abbott is a global healthcare company devoted to improving life through the development of products and technologies that span the breadth of healthcare. With a portfolio of leading, science-based offerings in diagnostics, medical devices, nutritionals and branded generic pharmaceuticals, Abbott serves people in more than 150 countries and employs approximately 74,000 people.

Visit Abbott at www.abbott.com and connect with us on Twitter at @AbbottNews.

Abbott will webcast its live first-quarter earnings conference call through its Investor Relations website at www.abbottinvestor.com at 8 a.m. Central time today. An archived edition of the call will be available after 11 a.m. Central time.

Private Securities Litigation Reform Act of 1995 — 
A Caution Concerning Forward-Looking Statements

Some statements in this news release may be forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Abbott cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, technological and other factors that may affect Abbott's operations are discussed in Item 1A, "Risk Factors,'' to our Annual Report on Securities and Exchange Commission Form 10-K for the year ended Dec. 31, 2015, and are incorporated by reference. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments, except as required by law.

 

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Earnings

First Quarter Ended March 31, 2016 and 2015

(in millions, except per share data)

(unaudited)

 
   

1Q16

 

1Q15

 

%
Change

 

Net Sales

 

$4,885

 

$4,897

 

(0.2)

 
               

Cost of products sold, excluding amortization expense

 

2,140

 

2,081

 

2.9

 

Amortization of intangible assets

 

144

 

156

 

(7.5)

 

Research and development

 

379

 

313

 

21.0

 

Selling, general, and administrative

 

1,698

 

1,737

 

(2.3)

 

Total Operating Cost and Expenses

 

4,361

 

4,287

 

1.7

 
               

Operating earnings

 

524

 

610

 

(14.1)

 
               

Interest expense, net

 

25

 

16

 

58.8

 

Net foreign exchange (gain) loss

 

478

 

(54)

 

n/m

1)

Other (income) expense, net

 

19

 

(5)

 

n/m

 

Earnings from Continuing Operations before taxes

 

2

 

653

 

(99.7)

 
               

Tax (benefit) expense on Earnings from Continuing Operations

 

(54)

 

124

 

n/m

2)

Earnings from Continuing Operations

 

56

 

529

 

(89.5)

3)

               

Earnings from Discontinued Operations, net of taxes

 

244

 

26

 

n/m

 

Gain on Sale of Discontinued Operations, net of taxes

 

16

 

1,737

 

(99.1)

 

Net Earnings from Discontinued Operations, net of taxes

 

260

 

1,763

 

(85.2)

4)

               

Net Earnings

 

$316

 

$2,292

 

(86.2)

 
               

Net Earnings from Continuing Operations, excluding 

             

Specified Items, as described below

 

$615

 

$719

 

(14.5)

 
               

Diluted Earnings per Common Share from:

             
               

Continuing Operations

 

$0.04

 

$0.35

 

(88.6)

 

Discontinued Operations

 

0.17

 

1.16

 

(85.3)

4)

Total

 

$0.21

 

$1.51

 

(86.1)

 
               

Diluted Earnings per Common Share from Continuing 

             

Operations, excluding Specified Items, as described below

 

$0.41

 

$0.47

 

(12.8)

3)

               

Average Number of Common Shares Outstanding

             

Plus Dilutive Common Stock Options 

 

1,484

 

1,516

     
               

NOTES:

 

See tables on page 11 for an explanation of certain non-GAAP financial information.

n/m = Percent change is not meaningful.

See footnotes on the following page.

 

1)

2016 Net foreign exchange loss includes a loss of $477 million related to the revaluation of Abbott's net monetary assets in Venezuela using the Dicom exchange rate, which is the Venezuelan government's official floating exchange rate.

   

2)

2016 Tax on Earnings from Continuing Operations includes the impact of a net tax benefit of approximately $140 million as a result of the resolution of various tax positions from prior years, partially offset by the unfavorable impact of non-deductible foreign exchange losses related to Venezuela.

   

3)

2016 Net Earnings from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $559 million, or $0.37 per share, for intangible amortization expense, the foreign exchange loss related to Venezuela, and other expenses primarily associated with cost reduction initiatives and acquisitions, partially offset by the favorable impact of a net tax benefit as a result of the resolution of various tax positions from prior years. 

   
 

2015 Net Earnings from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $190 million, or $0.12 per share, for intangible amortization expense, expenses associated with cost reduction initiatives and expenses related to acquisitions.

   

4)

2016 Earnings and Diluted Earnings per Common Share from Discontinued Operations, net of taxes reflect the impact of a net tax benefit of $247 million as a result of the resolution of various tax positions from prior years.

   
 

2015 Earnings and Diluted Earnings per Common Share from Discontinued Operations reflect the after-tax gain of $1.737 billion on the sale of the developed markets branded generics pharmaceuticals and animal health businesses to Mylan on Feb. 27, 2015 and Zoetis on Feb. 10, 2015, respectively; the first-quarter financial results from these businesses up to the date of sale; and a favorable adjustment to tax expense as a result of the resolution of various tax positions from previous years related to AbbVie operations.

 

NON-GAAP RECONCILIATION OF FINANCIAL INFORMATION FROM CONTINUING OPERATIONS

 

Abbott Laboratories and Subsidiaries

Non-GAAP Reconciliation of Financial Information From Continuing Operations

First Quarter Ended March 31, 2016 and 2015

(in millions, except per share data) 

(unaudited)

 
   

1Q16

   

As
Reported
(GAAP) 

 

Specified
Items

 

As
Adjusted

 

% to
Sales

                 

Intangible Amortization

 

$144

 

($144)

 

--

   

Gross Margin

 

2,601

 

172

 

$2,773

 

56.8%

R&D

 

379

 

(45)

 

334

 

6.8%

SG&A

 

1,698

 

(43)

 

1,655

 

33.9%

Interest expense, net

 

25

 

(12)

 

13

   

Net foreign exchange (gain) loss

 

478

 

(477)

 

1

   

Other (income) expense, net

 

19

 

(4)

 

15

   

Earnings from Continuing Operations before taxes 

 

2

 

753

 

755

   

Taxes on Earnings from Continuing Operations

 

(54)

 

194

 

140

   

Net Earnings from Continuing Operations

 

56

 

559

 

615

   

Diluted Earnings per Share from Continuing Operations

 

$0.04

 

$0.37

 

$0.41

   

 

Specified items reflect intangible amortization expense of $144 million, the impact of the foreign exchange loss in Venezuela of $477 million, and other expenses of $132 million, primarily associated with cost reduction initiatives and acquisitions, partially offset by a net tax benefit of approximately $140 million as a result of the resolution of various tax positions from prior years.

   

1Q15

   

As
Reported
(GAAP)

 

Specified
Items

 

As
Adjusted 

 

% to
Sales

                 

Intangible Amortization

 

$156

 

($156)

 

--

   

Gross Margin

 

2,660

 

186

 

$2,846

 

58.1%

R&D

 

313

 

(1)

 

312

 

6.4%

SG&A

 

1,737

 

(42)

 

1,695

 

34.6%

Other (income) expense, net

 

(5)

 

(5)

 

(10)

   

Earnings from Continuing Operations before taxes

 

653

 

234

 

887

   

Taxes on Earnings from Continuing Operations

 

124

 

44

 

168

   

Net Earnings from Continuing Operations

 

529

 

190

 

719

   

Diluted Earnings per Share from Continuing Operations

 

$0.35

 

$0.12

 

$0.47

   

 

Specified items reflect intangible amortization expense of $156 million and other expenses of $78 million, primarily associated with cost reduction initiatives and acquisitions.

RECONCILIATION OF TAX RATE FOR CONTINUING OPERATIONS 
A reconciliation of the first-quarter tax rates for continuing operations for 2016 and 2015 is shown below:

     

1Q16

($ in millions)

 

Pre-Tax
Income

 

Taxes on
Earnings

 

Tax
Rate

As reported (GAAP)

 

$2

 

(54)

 

n/m

Specified items

 

753

 

194

   

Excluding specified items

 

$755

 

$140

 

18.6%

               
     

1Q15

($ in millions)

 

Pre-Tax
Income

 

Taxes on
Earnings

 

Tax
Rate

As reported (GAAP)

 

$653

 

$124

 

19.0%

Specified items

 

234

 

44

   

Excluding specified items

 

$887

 

$168

 

19.0%

   

1)

Reported tax rate on a GAAP basis for 2016 includes the impact of a net tax benefit of approximately $140 million as a result of the resolution of various tax positions from prior years, partially offset by the unfavorable impact of non-deductible foreign exchange losses related to Venezuela.

 

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SOURCE Abbott

For further information: Abbott Financial: Scott Leinenweber, (224) 668-0791, Michael Comilla, (224) 668-1872, Jeffrey Byrne, (224) 668-8808, Abbott Media: Darcy Ross, (224) 667-3655, Elissa Maurer, (224) 668-3309
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